Change is not just a political hot topic these days. According to a Gartner analyst, four emerging software solutions are reshaping software as we know it and will likely cause major disruptions to vendors and how the software industry delivers its products and services.

“Four overarching trends are reshaping how IT is used in the workplace. Each of these megatrends or disrupters must be evaluated to determine if it will have an effect on the business,” said Yvonne Genovese, vice president and distinguished analyst at Gartner, at the Gartner Symposium/ITxpo in Orlando, Fla.

These software solutions are “changing to be user-centric, Web-centric, service-oriented and utilized through new delivery models, such as cloud and software as a service,” noted Genovese, in a press release from the event.

Here are the four major disruptions to the software industry that Genovese has identified:

Disrupter No. 1: Rise in New Technologies and Convergence of Existing Technologies. “The IT market has reached a period of accelerated change and innovation in how IT is applied and delivered to businesses and consumers,” states the release. “Technology changes that have been centered on SOA migration have now been augmented to include business process management, device portability and mashup-capable content.”

By 2010, for example, Genovese predicts that Web mashups will be the “dominant model” for the creation of composite enterprise applications. (To read about Oracle’s efforts on its next-gen applications, see “Oracle Fusion Applications: Is 2010 Delivery Too Little, Too Late, or Smart Strategy?”)
“Mashup popularity stems from the ease with which mashups can be created. Because mashup applications can be created on the fly, they open up possibilities for a new class of more short-term or disposable applications that could never meet the criteria for corporate investment,” says Genovese. “Another benefit is that users can easily personalize mashup content displays. Mashups can resolve issues such as content aggregation and the needs of business users to have the personal flexibility to do different things by combining data from within and outside the enterprise.”

Disrupter No. 2: Change in Software User and Support Demographics. Changes in how, where and when everyone works, as well as innovative methods in how companies obtain their software using the Internet, are fundamentally altering the structure of business. By 2015, Genovese says, no company will be able to build or sustain a competitive advantage unless “it capitalizes on the combined power of individualized behaviors, social dynamics and collaboration.”

“Most current software is focused on general enterprise needs rather than user-specific needs,” Genovese says. “The opportunity for business and IT leaders is to understand how the individualization of work will affect businesses, critical processes, innovation and inter-enterprise collaboration. End-user preferences will decide as much as half of all software, hardware and service acquisitions made by IT.” (See “P&G Flirts with Google Apps and Scares the Bejesus Out of Microsoft” for an inside account of why P&G users wanted to use Google Apps.)

Disrupter No. 3: Revolutionary Changes in Software and How it is Consumed. Genovese predicts that by 2010, SOA will be used, at least in part, in more than 80 percent of new, mission-critical applications and business processes. “The resulting future application environment will be more granular, inclusive and fluid to enable rapid composition, integration, orchestration and reuse,” according to Gartner.

During 2008 and 2009, Genovese states that businesses must “radically re-engineer their processes, governance and disciplines to initiate and manage this transition” as well as evaluate and manage external and off-premises delivery of applications.

“Market excitement over Web platforms, SaaS and other IT utility services will only intensify, and this will increase business buyers’ appetites for these new options and services,” says Genovese. “This period will see huge changes in all facets of the IT market including clients, providers, investors, business and IT professionals and consumers.”

Disrupter No. 4: Software Market Moves to Megavendors Supporting Large Ecosystems. Software megavendors (SAP and Oracle, for example) have proven their impact and influence over customer spending across a range of markets, Genovese notes. “Megavendors seek to dominate enterprise architecture and the terms of integration in multivendor portfolios,” she adds. However, focused vendors (a.k.a., best of breed) must coexist with other applications and with enterprise architecture.

“As the transformation to SOA for packaged applications and the exposing and manipulation of process metadata become minimum requirements for the next generation, it is megavendors that will have the resources, and focused vendors that will have the incentive,” Genovese added. Unfortunately, she stated that focused, best-of-breed vendors face a long time before a next generation of open, composite applications drives the market and opens it to a wider range of vendors.

“We see rapidly changing technology in an industry that seems to be maturing. Vendors are focusing more on the ‘business of software’ rather than solely on product competition,” Genovese says. “Users faced with increased vendor power and lower price flexibility are looking for alternatives, containment strategies and ways to lower vendor switch costs. How the vendors react to these changes and pressures will be the basis for changes in their competition over the next five years.”

Firm urges two IT budgets: one based on execs’ guidelines, another for growth should the economy improve

IT spending is faring better than the overall economy, and the sector “will avoid a recession in 2008,” according to Gartner Inc. But in a report sent to clients this week, the analyst firm said it believes IT budgets will show “very low year-over-year growth rates until business growth significantly improves.”

Gartner and Forrester Research Inc. do not see tech spending traveling into negative territory, but the word “slow” and “slowdown” is used often enough in their reports to get the message across about what’s ahead. Forrester released its forecast last week.

Gartner is nonetheless advising clients to hedge a little and not assume that the economy won’t improve next year. It’s recommending that IT managers prepare two budgets: one “based on guidelines and directions of senior executives,” and another “growth budget for 2009 in the event that healthier economic growth rates begin to return next year.”

Gartner said that overall U.S. economic growth and IT growth are moving at two different speeds and that the tech industry may be “even more resilient than we had originally imagined.”

In the Gartner report, analysts Ken McGee and Mark McDonald cite government data, results of a survey of about 1,000 CIOs, and recent quarterly reports from top vendors to reaffirm an assessment made earlier this year that IT spending won’t turn negative. Tech stocks have taken a beating on Wall Street but have recovered some this week.

Gartner noted in the report that after the last recession, U.S. IT budgets grew slowly. But it said that “executives should not blindly follow history and automatically cut IT costs in 2009 until they are certain that IT’s current counter economic-trend performance isn’t being contributed to, in part, by their competitors.”

In a Sept. 24 report, Forrester said technology purchases were stronger in the first half of 2008 than its projections, but that it was cautious nonetheless. “The U.S. recession and the resulting tech market slowdown have only been delayed, not cancelled,” the report said.

Forrester projects a slowdown in tech purchases in the remainder of this year and that the trend will carry into the first half of 2009. But it has now raised its forecast in 2008 growth in the purchases of IT goods and services by business and government to 5.4%, compared with its May forecast of 3.4%. But it has lowered its projected growth rate of 10% for next year to 6.1%. Forrester noted that software and outsourcing are two strong areas.

The Forrester report’s author, analyst Andrew Bartels, said with regard to financial firms, he expects 10% cuts at most in IT where firms have been acquired or merged. In the case of the bankrupt firms whose assets where purchased, the IT reductions could be as much as 20% to 30%, he said.

Source: Computer World

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